Canada-US trade deal pos­si­ble if Nafta fails, Trudeau says

Cana­dian Prime Min­is­ter Justin Trudeau said he would con­sider one-on-one talks with the United States on trade, if ne­go­ti­a­tions to up­date the North Amer­i­can Free Trade Agree­ment (NAFTA) fail.

“We will al­ways look at dif­fer­ent op­por­tu­ni­ties,” Trudeau said Thurs­day in re­sponse to a ques­tion about a two-way US trade deal at the For­tune Global Fo­rum in China. “We’re ready for any­thing, when things come for­ward. The new ad­min­is­tra­tion has shown a will­ing­ness to dis­rupt the pat­terns of past be­hav­ior and look for new mod­els, and we’re will­ing to en­ter­tain next steps for­ward.”

The prime min­is­ter, who was in the south­ern Chi­nese city of Guangzhou to wrap up a five-day visit, said the 23-year-old NAFTA “needs to be up­dated” and warned that can­cel­ing the pact would harm Cana­di­ans. His com­ments fol­lowed the un­ex­pected break­down in Canada’s ef­forts to launch free-trade talks with China, with of­fi­cials say­ing the two sides would con­tinue dis­cus­sions.

While Trudeau reaf­firmed his de­sire to save NAFTA, which un­der­pins US$1.2 tril­lion of trade, his com­ments will likely fuel spec­u­la­tion that Canada is pre­par­ing to move ahead with­out Mex­ico. The re­marks come just weeks af­ter other mem­bers of the Trans-Pa­cific Part­ner­ship crit­i­cized Canada for up­end­ing ef­forts to res­ur­rect the trade pact with­out the US.

The Cana­dian gov­ern­ment has re­peat­edly said it was com­mit­ted to work­ing with Mex­ico to re­new NAFTA, but of­fi­cials have some­times sig­naled a will­ing­ness to con­sider a two-way pact of the kind US Pres­i­dent Don­ald Trump prefers. Trump has threat­ened to scrap Nafta, if the other two sig­na­to­ries don’t ac­cept pro­pos­als that the ad­min­is­tra­tion ar­gues will re­duce US trade deficits.

“We’re still very con­fi­dent in the kinds of sup­port and re­sponse that we’ve got­ten from friends, part­ners, col­leagues in the US who rec­og­nize that trade is a pow­er­ful driver of growth and ben­e­fit to cit­i­zens,” Trudeau said Thurs­day.

Canada and the US had a bi­lat­eral trade deal that was su­per­seded and sus­pended by NAFTA. Canada’s chief NAFTA ne­go­tia­tor told law­mak­ers this week that the old agree­ment would kick in again if NAFTA failed, although it would have to be re-im­ple­mented.

Start­ing talks with China could strengthen Trudeau’s hand in NAFTA ne­go­ti­a­tions, demon­strat­ing that the US’ sec­ond­largest trad­ing part­ner has other op­tions. But a per­sonal visit to Bei­jing — the sec­ond in as many years for Trudeau — wasn’t enough to over­come Chi­nese con­cerns about the “pro­gres­sive” trade pro­vi­sions Canada in­sists must be part of any deal.